- The Enterprise
- The Recorder
Eighteen years ago, two brothers and a friend started Smartronix in the basement of a Lexington Park office building.
Today, they have about 600 employees, and say they’ve been a $100 million company since 2009. And in a local economy with Patuxent River Naval Air Station as its lifeline, they’ve managed to get there without being fully dependent on defense spending.
“We’re very, very proud of the types of investments we’ve made,” said Smartronix CEO John Parris. It’s a level of success that Parris said he never anticipated.
As the federal government winds down its military presence in the Middle East and slashes defense spending, companies in St. Mary’s are realizing they may not prosper if they depend solely on work with the Navy to stay afloat. There’s been a push in recent years for local businesses to add clients, products and services, or all three.
On Smartronix’s 17-acre campus in Hollywood, Parris opened the doors recently to a conference room with space for dozens of clients, dimmed the lights and started an illustrated presentation about choices his team has made to weather the fiscal storm.
Currently, the company has contracts in health-care information technology, cyber security, cloud computing, network operations and software development. It can manufacture — in house — engineering products, including communication equipment that clients can use in high-tech data centers, or that warfighters can tuck into their backpacks.
Customers include military special operations and military health care, but also the U.S. departments of justice and treasury, and others in private industry. They’re stateside and also span the globe, from Turkey to Australia, New Zealand, Italy and Canada.
“Many skill sets we have can be applied locally,” Parris said. But he added, “we position ourselves to look for opportunities outside the geographical area.”
Smartronix won an $18 million contract in 2009 to redesign recovery.gov, a website to help taxpayers track federal stimulus spending. That work was done on the cloud. The company later helped the Treasury Department move its external website to the cloud. (In layman’s terms, think of it as using the Internet, rather than a personal computer, for a hard drive, decreasing reliance on sometimes complex or expensive hardware and software.)
In 2010, Smartronix acquired Cogon Systems, a health information-exchange company. The next year, it bought Synteractive, a company that specializes in cloud consulting and social collaboration. “I’m not saying we’re walking in the park right now,” Parris said. “But we’ve aligned ourselves with markets where there are a lot of growth.”
Some defense-oriented companies saw the need to diversify about three years ago. Others may have realized it during the past year as the government made drastic reductions in spending, said Glen Ives, president of the Southern Maryland Navy Alliance, which acts as a liaison between industry and Pax River. Regardless, he said, “it is not a good business strategy to rely so heavily on a single market source as we do here at Pax River.”
But, it’s easy to see how that happened. Pax River has been in the community for 70 years. And during the past 20 years, there was a fiscal boom as other Navy commands relocated to the base and businesses grew up to support them. “It’s easier to stay with what you know, and much more difficult to push out of your comfort zone and pursue new markets,” Ives said.
Recently, sequestration and the federal government’s failure to adopt a budget have hit home in St. Mary’s, Ives said. The community had, largely, been shielded from the recession that began in 2008 because companies were busy helping the Navy with its war efforts.
As conflicts abroad settle, Ives said, changes in federal spending have exposed the community’s economic vulnerability and put a spotlight on the need to diversify the economy.
Small, niche companies may never need to grow, but most companies will be forced to change to survive market swings, Ives said. It will be key to focus on federal agencies less impacted by sequestration and cuts in military spending, commercial markets that are growing, and areas such as cyber technology and autonomous systems, Ives said. “It doesn’t take an expert market analyst to recognize that it might be prudent to steer in those directions.”
Tom Sanders, owner of CTSi, describes his own Lexington Park-based company as small, with about 90 employees.
Much of its work has been with the Naval Air Systems Command, headquartered at Pax River. “But as things have changed, we’ve had to change,” Sanders said. “We’ve branched out more into the commercial world and have had a few opportunities that actually have worked out pretty well for us.”
One project involved developing training and simulation software for a major agricultural company. That company’s challenge was training migrant workers, who because they might only be on the job a year at a time, rarely gained experience needed to learn from previous mistakes.
The company, which Sanders declined to name, needed to develop a way to teach workers to separate good seed from bad — a detail that had the potential to save the customer millions of dollars.
CTSi developed the software, Sanders said, and now workers can sit in front of computers that teach them how to do their jobs.
Work supporting the customer also has gone much faster than work supporting government clients. Sometimes, two years can pass from the time a company submits a proposal to do government work until the time it wins the contract. Sanders’ team was able to get this contract in three weeks. It developed the software in about six months.
It feels like a start-up company — and that’s by design. “We’ve worked very hard to create a culture of innovation,” Sanders said.
It’s “a culture where failure is OK,” he said. Engineers should feel free to come up with “stupid ideas” anytime, he said. “Once in a while, those stupid ideas aren’t really that stupid when you dig into it.” The idea to pursue work in agriculture came from an engineer who was familiar with the industry.
As companies pursue similar opportunities, it’s important to think about sustaining that growth, said Paul Ausley, president of Ausley and Associates. It requires teamwork among federal, state and local governments, as well as attracting the University of Maryland permanently to St. Mary’s to secure a strong academic and research presence, he said. “It’s not like one person can make that happen,” he said.
As those groups work together with industry, supporting innovation and new business, the synergy is bound to create an environment that attracts young professionals, Ausley said. Through it all, it’s key for businesses to support and mentor each other.
“This is a hell of a long road ahead of us, and it’s going to be hard,” Ausley said. “But I think that we can get there.”
Steve Anderson already knows what he needs to do on that journey. The director of the St. Mary’s County Department of Economic and Community Development said when companies start talking about diversifying, it’s good. But it’s a double-edged sword.
“It means we have to step up to the plate,” Anderson said.
“Let me tell you what we’re dealing with. And, I think this is the thing that freaks people out sometimes,” Anderson said. If existing companies start creating new products and work opportunities, “there’s always a chance of them leaving. If you’re going to have growth, you’re going to have competition.”
Firms and local and state governments recruit businesses all the time, offering them attractive incentives in exchange for hope of bringing jobs and revenue to their communities.
“If we’re not going to play, we’re going to lose,” Anderson said. That means going after leads aggressively, and being inquisitive in attracting business. “It’s really going to be on our shoulders as a community and a government to ensure that if there’s going to be growth, that it happens here.”
Parris, of Smartronix, said he intends to stay in St. Mary’s. In its first 10 years, Parris said, less than 1 percent of the work at Smartronix was done in support of customers in Maryland, let alone the county. But Smartronix started here because it’s where two of its founders, Alan Parris and Arshed Javaid, lived. John Parris moved here in 1995 to start the company with them.
“I think it’s a great community for families,” Parris said. But, St. Mary’s also has a strong concentration of well-educated, high-tech professionals. “We’ve got so much talent.” It’s where he wants his business to grow.
“We want to help make Southern Maryland special,” Parris said. But the company has also followed work opportunities where they were. And that, Parris said, “gave us a great opportunity to grow external to Southern Maryland.”
To learn more
Small, high-tech firms seeking information about the Naval Air Warfare Center Aircraft Division Small Business Innovation Research program grants may visit www.navair.navy.mil/nawcad, or call the small business office at 301-342-1133.